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Monetary Council ready to use available tools to preserve price, financial stability

The Monetary Council of the National Bank of Hungary (MNB) said it stands ready, if necessary, to use the available tools to maintain a predictable economic environment, ensure price stability and preserve the stability of the financial system, thus contributing to economic growth, the central bank said after a non-rate-setting meeting of the Council on Tuesday.

The rate-setters discussed economic and financial trends at the meeting, in line with the agenda, the MNB said.

The Council noted a loss of confidence in Hungarian financial assets to a "significant degree" because of economic policy developments and the uncertainty surrounding the outcome of talks on financial assistance from the International Monetary Fund and the European Union. "A sustained weakening of the [forint’s] exchange rate increases economic players’ compulsion to adjust balance sheets, hurts the outlook for the real economy and inflation, and causes disruptions on financial makers and in the operation of the banking system," it added.

The central bank said the Council welcomed the government’s intent to reach a speedy agreement with the IMF and EU and acknowledged the market’s positive reaction to its expression of this aim.

"The Council stresses that the capital and liquidity positions of the Hungarian banking system are sufficiently stable", the MNB said.